Market Data as of Week Ending 3/19/2021 unless noted otherwise.
U.S. stock prices declined after major benchmarks rose early in the week and then reversed course as bond yields increased to their highest levels in more than a year. Corporate profitability continues to improve as earnings growth estimates for the first quarter rose during the week. According to FactSet, the current estimated earnings growth rate for the S&P 500 is 22.6%. Small and medium sized companies lagged their large company peers and style factors such as value and growth were mostly irrelevant. Sectors that tend to be more defensive such as consumer staples, communication services, and healthcare outperformed with gains in each sector. Energy and financials lagged the broader market as they were pressured by declining oil prices and new policy from the Federal Reserve. Developed foreign stocks in Europe and Asia outperformed U.S stocks and Emerging Market stocks lagged developed foreign markets.
U.S. Treasury yields rose again this past week to 1.75% before settling in to finish the week at 1.72%. Despite statements from the Federal Reserve that they anticipated no rate hikes until 2023, along with their confidence that any increase in inflation will prove short-lived, the bond market response demonstrates that market participants are not convinced. Longer-term bonds lagged for the week while short duration investment grade corporate bonds were the best performing asset class. Investment grade corporate bonds ended the week yielding nearly 2.3% and high yield corporate bonds are yielding more than 4.5%.
Economic data released during the week were mixed and mostly overshadowed by the Fed and how they would respond to massive fiscal stimulus. One reason why the Fed believes inflation is not a near-term concern is that we still have 4.1 million Americans who continue to claim ongoing unemployment benefits. Weekly initial unemployment claims increased to 770,000 and other measures of economic growth such as retail sales, industrial production and homebuilder sentiment declined. However, the Fed remains committed to the current pace of asset purchases at $120 billion per month and upgraded its economic growth projection from 4.2% to 6.5%. Japan ended the coronavirus state of emergency in Tokyo (and surrounding areas) and their central bank reaffirmed their commitment to large-scale asset purchases during times of heightened market instability.
Market Data as of Week Ending 11/27/2020 unless noted otherwise.
U.S. stock prices advanced as investors responded to another round of positive vaccine announcements and more hurdles have been cleared for the transition to a new administration in the White House. Small and medium sized company stocks generally outperformed large company peers, while growth stocks lagged value counterparts. Cyclical sectors delivered the strongest gains led by the energy, financials, and materials sectors. Real estate was the only sector to decline for the week, while other defensive sectors such as utilities, consumer staples, and health care also lagged the S&P 500 Index. Developed foreign stocks in Europe and Asia lagged U.S stocks for the first time in several weeks, while Emerging Market stocks underperformed developed foreign markets.
U.S. Treasury yields were mixed this past week as shorter term yields declined and longer term yields rose. Despite the news in the prior week that emergency Federal Reserve lending programs will not be renewed, high yield corporate bonds were once again the top performing asset class and government bonds lagged. Investment grade corporate bonds are yielding more than 1.8% and high yield corporate bonds are yielding approximately 4.8%.
Economic data released during the week was mixed and continues to be overshadowed by coronavirus news. Weekly initial unemployment claims unexpectedly rose again for the second consecutive week to 778,000 and approximately 6.1 million Americans continue to claim ongoing unemployment benefits. Other disappointing reports included a 0.7% decline in the monthly personal income figure and consumer sentiment fell to the lowest level since August. Housing data remains robust as there were nearly 1 million new home sales in October. Coronavirus restrictions remain in place for much of Europe as Germany extended their restrictions through December 20 and Portugal declared a state of emergency for 15 days. European business activity declined as the services sector has suffered from recent coronavirus restrictions.
Market Data as of Week Ending 11/20/2020 unless noted otherwise.
U.S. stock prices were mixed as investors responded to positive vaccine announcements and rising coronavirus cases. Improving company fundamentals are being overshadowed by concerns about the economic recovery. JPMorgan Chase & Co. analysts are forecasting a 1% contraction in economic activity next quarter as several states impose new restrictions. Small and medium sized company stocks generally outperformed large company peers, while growth stocks lagged value counterparts. Cyclical sectors delivered the strongest gains led by the energy, industrials, and materials sectors. Health care was the worst performing sector, followed by defensive sectors such as utilities and consumer staples, which also lagged the S&P 500 Index. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks underperformed developed foreign markets.
U.S. Treasury yields declined this past week after reaching their highest levels since March in the previous week. Treasury Secretary Steven Mnuchin announced that several emergency Federal Reserve lending programs will not be renewed when they expire at the end of the year. Within intermediate term bonds, high yield corporate bonds were once again the top performing asset class and longer duration bonds generally outperformed shorter duration bonds. Investment grade corporate bonds are yielding more than 1.8% and high yield corporate bonds are yielding nearly 5%.
Economic data released during the week was mixed and largely overshadowed by coronavirus news. Weekly initial unemployment claims rose for the first time in more than a month to 742,000 and approximately 6.4 million Americans continue to claim ongoing unemployment benefits. Monthly data for retail sales and industrial production rose, but both reports indicated concerns going forward. Housing data remains robust as new housing starts rose 5% and existing home sales rose 4%. European leaders are considering whether to extend lockdowns and restrictions as coronavirus infection rates have declined.
Market Data as of Week Ending 08/14/2020 unless noted otherwise.
U.S. stock prices were generally higher last week as economic trends demonstrate support for a sustained recovery. Analysts have increased S&P 500 earnings estimates for calendar year 2020 following steady declines that reached a bottom in July. There was no clear trend in performance based on company size; however, value stocks outperformed growth, regardless of company size. Value stocks outperformed despite negative returns in the real estate and utilities sectors. More cyclical sectors such as industrials, energy, materials, and consumer discretionary were the top performing sectors. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks lagged developed foreign markets.
U.S. Treasury yields rose again this past week. Investment grade corporate bonds lagged despite the yield advantage and favorable economic trends. Treasury bonds were the top performing segment as corporate bonds dealt with higher yields. While near term demand may have declined, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.
Initial unemployment claims declined this week and fell below 1 million for the first time since the pandemic began in March. Other positive economic data included core inflation which rose 0.6% from the prior month, the biggest jump in almost three decades. On an annual basis, core inflation measured 1.6%, a four-month high, following 1.2% in June. Economic readings in Europe and Asia were mixed but stock prices were supported by a weaker US dollar and improved outlook that stimulus measures may accelerate the economic recovery.
Market Data as of Week Ending 06/12/2020 unless noted otherwise.
U.S. stock prices retreated and recorded their worst weekly decline in almost three months. Market leadership reversed as cyclical sectors such as energy, financials, industrials, and materials underperformed while stocks in defensive and higher growth sectors outperformed. Small and medium sized businesses underperformed as investor sentiment shifted away from higher risk assets. Developed foreign stocks in Europe and Asia outperformed U.S stocks for the second consecutive week and Emerging Market stocks outperformed developed foreign markets.
U.S. Treasury yields declined for the week as concerns about the pandemic were priced into financial markets. Higher quality bonds such as government and investment grade corporate bonds outperformed, while high yield lagged. Investment grade corporate bonds are yielding approximately 2.3% and high yield corporate bonds are yielding more than 6%.
Initial jobless claims rose by 1.5 million last week and there are nearly 21 million Americans claiming ongoing unemployment benefits. The Federal Reserve announced that as their baseline expectation, there will be no interest rate increases through 2022.
Market Data as of Week Ending 05/29/2020 unless noted otherwise.
Stocks advanced for the second consecutive week as both investor and consumer sentiment improved. A combination of cyclical sectors (Financials, Industrials, and Materials) and defensive sectors (Real Estate and Utilities) outperformed. Small and medium sized businesses also delivered solid gains. Companies in the S&P 500 are expected to finish the first quarter with an earnings decline of nearly 15% and the consensus forecast for calendar year 2020 is a decline of more than 20%. Developed foreign stocks in Europe and Asia outperformed U.S stocks during the week, but Emerging Market stocks lagged developed foreign markets.
U.S. Treasury yields were mixed for the week as short and intermediate term bond yields narrowly declined while longer term yields nudged higher. For the second consecutive week, investment grade corporate bonds outperformed government bonds, while high yield was the top performing asset class. Investment grade corporate bonds are yielding approximately 2.5% and high yield corporate bonds are yielding nearly 7%.
Initial jobless claims rose by another 2 million last week; however, continuing claims dropped to 21 million recording the first decline since the coronavirus pandemic began. As states begin to let businesses reopen, U.S. consumer sentiment posted a surprise gain in the preliminary May report. Europe and Japan announced additional stimulus measures, but that news was overshadowed by rhetoric from U.S. and Chinese officials threatening the trade deal reached earlier in the year between the two countries.
Market Data as of Week Ending 05/01/2020 unless noted otherwise.
Stock prices were mixed for the week as local and state governments across the U.S. begin to relax social distancing and reopen parts of their economies. Small and medium sized businesses outperformed their larger counterparts for the second consecutive week. The S&P 500 Index gained 13% in the month of April which its was best monthly return since 1987. Developed foreign stocks in Europe and Asia posted strong gains for the week and Emerging Market stocks outperformed developed foreign markets.
U.S. Treasury yields were also mixed for the week as short-term bond yields declined while long-term yields increased. Corporate bonds, including below investment grade, outperformed as investor demand increased for higher yielding credit. Investment grade corporate bonds are yielding more than 2.5% and high yield corporate bonds are yielding more than 8%.
Jobless claims rose 3.8 million last week, bringing the total to more than 30 million Americans (approximately 18% of the U.S. working population) who have filed initial claims for unemployment insurance since the COVID-19 crisis began. In an advanced estimate, the U.S. reported that gross domestic product (GDP) decreased at an annual rate of 4.8% in the first quarter of 2020. Not surprisingly, the largest detractor was a drop in consumption of -7.6%. On a positive note, China has reported that Wuhan, where the pandemic began, has no remaining cases of COVID-19 in its city hospitals.
- Big Picture: Economic and Investing
- Mini Cycles and Investment Strategy in a Trendless World
- Investment Process
- Risk Management and Sell Discipline
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